Alleged sales practices lands Optus in court

Optus Mobile is being sued by the competition watchdog over allegations it sold expensive services and devices to “hundreds” of people experiencing vulnerability or disadvantage.

The Australian Competition and Consumer Commission (ACCC) filed the case in the Federal Court, alleging the practice was “incentivised by commission-based remuneration for sales staff.”

“This case concerns allegations of very serious conduct, as our case is that Optus sold goods to consumers experiencing vulnerability which they did not need, did not want and could not afford,” ACCC chair Gina Cass-Gottlieb said.

Optus CEO Michael Venter acknowledged the court filing and apologised.

"We sincerely apologise to all customers affected by this misconduct and for the distress caused," he said. 

"We deeply regret that in these instances we failed to meet the customer service standards that our customers deserve and should expect.

"We have cooperated with the ACCC in this investigation to date, will continue to do so and are committed to continuing to improve our processes in relation to customers experiencing vulnerability."

Unpacking the allegations

The ACCC alleges that impacted consumers - about 429 - were “living with a mental disability, had diminished cognitive capacity or learning difficulties, were financially dependent or unemployed, or had limited financial and legal literacy.”

Many were also “First Nations Australians from regional and remote areas or people from culturally and linguistically diverse backgrounds.”

The conduct is alleged to have occurred at two Optus Darwin stores, a Mount Isa store, as well as other “store locations across Australia”.

The ACCC alleges consumers were pressured “to purchase a large number of products, including expensive phones and accessories”, often without checks that the person lived in a coverage zone.

“Many consumers suffered financial harm, incurring thousands of dollars of debt and non-financial harm, such as shame, fear, and emotional distress about the debts or being pursued by debt collectors,” Cass-Gottlieb said.

“Thankfully many consumers were supported by financial counsellors, carers and other advocates who gave their time and effort to support consumers to eventually seek resolution of Optus’ conduct.”

In one alleged incident, “a person living with an intellectual disability which impacts their ability to speak and understand financial matters went into an Optus store and was sold an expensive phone, a business phone contract under a false ABN, a new NBN internet plan and accessories, though their disability was evident to Optus staff.” 

“The person did not want or need the majority of these items and was upset and embarrassed about the unwanted and expensive items they were sold,” the ACCC alleges.

“When the person’s representative went to the store to return the items, the Optus staff refused to cancel the contracts, and it was only through the intervention of a financial counsellor that Optus cancelled the contracts.”

The ACCC alleges that Optus clawed some of the sales commissions back “but failed to remediate affected consumers” who were stuck with unwanted devices and services, and - in some cases - pursued for debts “resulting from these sales”.

The commission also alleges the “unconscionable conduct continued [even] after management became aware of deficiencies in its systems that were being exploited by sales staff”, and that the deficiencies weren’t fixed.

The case against Optus was initiated after a referral from the Telecommunications Industry Ombudsman (TIO), which is engaged by consumers to facilitate dispute resolution in the telco space.

The ACCC said it would seek penalties, consumer redress, a compliance program from the telco and costs, among other things.

Optus assists customers, disciplines staff

Optus said it is providing refunds and waiving debts for affected customers.

Interim CEO Michael Venter said the telco “regretted” not acting faster “in some of these cases".

Venter said the alleged behaviour was out of step with company values and that it “does not tolerate employee behaviour which takes advantage of customers.”

“We have taken disciplinary action (including terminations) against staff whom we determined were responsible for this misconduct involving vulnerable customers,” he said.

Venter said that a “major review” of sales management, “especially to vulnerable customers”, had occurred over the last three years.

He said Optus had introduced “new sales systems that give us more oversight, as well as extra, compulsory training programs and enhancements to our IT systems, to help prevent misconduct in sales to vulnerable customers from happening.”

“We are [also] in the process of appointing a customer advocate in a new role to work alongside our partners, community groups, financial counsellors and our customer teams to focus specifically on improving our support for customers in need,” he said.